China's construction industry is proactively seeking to bolster trade relationships to cushion the impact of the ongoing trade war with the US, according to a recently published report by GlobalData.

Increased tariffs imposed by US President Donald Trump mean that China’s construction sector now faces significant challenges, particularly due to rising costs of essential materials like steel and aluminum.

Recognising the urgent need to diversify its trade partnerships, China has embarked on a strategic initiative to strengthen ties with neighbouring countries and key global markets.

Recent agreements with Vietnam and Spain underscore China's commitment to enhancing economic cooperation and securing alternative supply chains. These partnerships aim to offset the adverse effects of US tariffs, which have already begun to stifle demand for Chinese construction materials and services.

China is already home to the largest construction companies on the planet. According to GlobalData, seven Chinese companies are among the top 10 largest construction companies in the world, with China State Construction Engineering Corporation topping the list with revenues of $320bn.

In the Middle East and North Africa, Chinese contractors have a strong presence and 2024 dominated the market by securing $90bn of the $347bn of contracts awarded in the region, according to data from MEED Projects.

The construction industry, already facing a property market slump and high youth unemployment, is particularly vulnerable to the fallout from the trade war. Rising material costs are expected to inflate construction prices, making new builds less affordable. To combat this, China is likely to implement domestic stimulus measures aimed at bolstering demand within its own economy.

Goldman Sachs has revised its growth forecasts for China, predicting a GDP growth of only 4% in 2025, down from earlier estimates. However, by strengthening trade ties and focusing on regional partnerships, China aims to navigate the turbulent economic landscape and stabilise its construction sector.

As the situation evolves, the emphasis on international collaboration may prove crucial for China’s construction industry, allowing it to adapt and thrive despite the challenges posed by the US tariffs.